What was the strategy behind acquiring Galas?
We were one of the suppliers of Galas at that time, so with that purchase, we completed an integrated line of production. We do everything ourselves, and manage to serve Bimbo, as well as Procter & Gamble, Unilever, Grupo Modelo, and Heineken.
Is Galas or Janel more important in terms of assets?
They are about the same size, and are integrated. All of our production lines are integrated from plastic pallets to finished products. We have adhesive tapes for industrial purposes, and also for commercial use. On this side of the business, our biggest customers are the retailers Wal-Mart, Chedraui, Soriana, and Office Max.
What trends have you seen recently in retailing in Mexico?
The level of sophistication of the consumer in Mexico is developing, and in general has been evolving considerably over the past decade. For Christmas products, the level of sophistication is amazing. They want artificial trees that are almost exactly like a real tree, and you can really compare it to any country in Europe or the US in terms of products and the desires of consumers.
What impact will your new acquisition aimed at exporting plastic trees to the US have on your overall operations?
It is an acquisition of a US company, and I am hoping it will take place in 2015. Production in 2013 was around 680,000 Christmas trees, but I believe we have improved on this in 2014, and have reached closer to 800,000. Out of our 20,000 SKUs, half of them are Christmas trees and decoration articles. As a group, 18% of our revenue comes from Christmas, which is a lot. Five customers make 7% of those sales.
What steps are you taking to make Galas Janel a sustainable company?
We have several products in the plastic and in the packaging side of the business that are biodegradable. Around 99% of our production in Mexico is done at the eight production facilities we have in Mexico City, Toluca, and Monterrey.
How important is innovation to your company?
In 2014, we launched around 200 new products and stopped between 100 and 150. We have 17 graphic designers who constantly come up with new products, as we understand that we have to innovate regularly.
What is the biggest challenge in going into the US?
Pricing remains the most significant challenge we face in doing this. In entering the US market, you are setting yourself up for direct competition with Chinese firms. In our segment, China is getting more competitive in terms of quality. However, our products have always been high quality, so this is not too much of an issue; the problem is related to rising expenses. Shipping our products from Asia is difficult, and it is also risky as you can only sell these products for two or three weeks of the year, so if something goes wrong, the risk is relatively high.
How much do you export?
As a group, we export about 15% of the total. Our biggest exports are tapes and sticky notes. For now, most of our production is domestic. However, from now on we will be focusing on exports because the internal market in Mexico is not growing. Over the past couple of years, growth in the Mexican market has been between 2% and 3%, and this is not enough for us. We need to expand to other countries.
Where do you see this group in the next decade?
We are planning for a growth in exports, and an expanded presence in other countries through acquisitions in the US and the EU. Our strategy involves the establishment of distribution centers in Europe. Our main goal is to promote growth and our international presence.